(ICON)
Prudential
20/20 Focus
Fund
ANNUAL
REPORT
Jan. 31, 1999
(LOGO)
<PAGE>
Prudential 20/20 Focus Fund
Performance At A Glance.
The Prudential 20/20 Focus Fund opened in July 1998, just
before
the stock market dropped sharply. The decline bottomed in
October
and then the S&P 500 Index rose swiftly. However, the gains
were
concentrated in large-capitalization growth stocks; value
stocks
trailed by a large margin. The very strong performance of
our growth
stocks and our technology holdings -- both growth and value
stocks -- powered our Fund ahead of the Lipper Capital
Appreciation
Fund Average.
<TABLE>
Cumulative Total Returns1 As of
1/31/99
<CAPTION>
Since
Since
Inception2
Inception2
(Without Sales Charge) (With
Sales Charge)
<S> <C> <C>
Class A 15.19%
9.43%
Class B 14.61
9.61
Class C 14.61
12.47
Class Z 15.32
15.32
Lipper Capital
Appreciation Fund Avg.3 10.55
N/A
</TABLE>
Past performance is not indicative of future results.
Principal and
investment return will fluctuate so that an investor's
shares, when
redeemed, may be worth more or less than their original
cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc.
Since the Fund has been in existence less than one year, no
average
annual total returns are presented. The Fund charges a
maximum
front-end sales charge of 5% for Class A shares and a
declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%, 2%,
1% and
1% for six years for Class B shares. Class B shares will
automatically convert to Class A shares, on a quarterly
basis,
approximately seven years after purchase. Class C shares are
subject to a front-end sales charge of 1% and a CDSC of 1%
for
18 months. Class C shares bought before November 2, 1998
have a
1% CDSC if sold within one year. Class Z shares are not
subject
to a sales charge or distribution fee.
2 Inception dates: Class A, B, C, and Z, 7/1/98.
3 The Lipper Since Inception returns are for all funds in
each
share class in the Capital Appreciation Fund category.
How Investments Compared.
(As of 1/31/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks
to each of the investments listed above are different -- we
provide
12-month total returns for several Lipper mutual fund
categories to
show you that reaching for higher returns means tolerating
more risk.
The greater the risk, the larger the potential reward or
loss. In
addition, we've included historical 20-year average annual
returns.
These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received
higher historical total returns from stocks than from most
other
investments. Smaller capitalization stocks offer greater
potential
for long-term growth but may be more volatile than larger
capitalization
stocks.
General Bond Funds provide more income than stock funds,
which can help
smooth out their total returns year by year. But their
prices still
fluctuate (sometimes significantly) and their returns have
been
historically lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state agencies and/or municipalities. This
investment
provides income that is usually exempt from federal and
state income
taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value;
they don't fluctuate much in price but, historically, their
returns
have been generally among the lowest of the major investment
categories.
<PAGE>
(PICTURE) (PICTURE)
Tom Jackson Sig Segalas
Portfolio
Managers' Report
The Prudential 20/20 Focus Fund's two investment managers
each
invest in up to 20 stocks, selected for their superior
potential
for long-term capital growth. Tom Jackson looks for
bargains. He
uses a strict value investment style to buy stocks whose
prices
he believes are too low given their underlying earnings,
assets,
cash flow, dividends or book value. Spiros "Sig" Segalas
uses a
growth investment style, concentrating on stocks of
established
companies that he believes will have superior absolute and
relative
earnings growth. There can be no assurance that the Fund's
investment
objective will be achieved.
Portfolio Composition.
Expressed as a percentage of
net assets as of 1/31/99.
(PIE CHART)
Strategy Session.
We balance our value and growth selections in concentrated
portfolios
holding the best of each of our ideas. Growth managers look
among the
most rapidly growing companies for those with the best long-
term
prospects and reasonable stock prices, while value managers
look
among neglected and inexpensive companies for those with the
best earnings growth prospects or asset values for the
dollar.
Historically, returns of the two styles complement each
other.
Sig Segalas: We think drug stocks have already realized much
of
their potential price appreciation for a while, so we
reduced our
holdings to reinvest the proceeds in technology stocks with
more
immediate promise, in our view. We increased our holdings in
companies we liked, such as MCI WorldCom, and added others,
such
as Autodesk. MCI WorldCom is now our largest commitment
because it
is the world leader in data and Internet access and is a
major
player in Internet infrastructure. We also like broadcasting
stocks with aggressive managements that are likely to
benefit
from the changing environment, including Clear Channel
Communications,
CBS, and Univision Communications.
Tom Jackson: Although this is a poor time for value returns,
it is a
good time for value investing. Almost all stocks look
expensive when
compared to historical price/earnings averages, but value
stocks are
deep bargains when compared with today's average share. On
the one
hand, we own many companies whose earnings historically have
had
above-average growth, but whose recent earnings
disappointments --
which we think are short term -- have driven down their
share prices.
These include high-quality companies such as Harris Corp.
and Compaq
Computer. On the other hand, we own companies whose recent
profitability
has been a concern of investors because of slowing worldwide
economic
growth, such as the auto parts company LucasVarity and
retailers
such as Tandy. We expect their earnings to accelerate when
the
global economy begins to strengthen.
Divergence.
We created the 20/20 Focus Fund because growth and value
investing
styles historically have performed well at different times.
We hoped
that the portfolio would have more consistent returns, as it
was
likely that one style would be strong when the other was
weak.
Nonetheless, we were surprised by how much styles differed
in
this unusual market. In the short period since the inception
of
our Fund, the S&P 500/Barra Growth Index has outperformed
the
Value Index by almost 19 percentage points. It was a very
one-sided
investment environment.
<PAGE>
What Went Well.
Our technology stocks made particularly strong contributions
to our
return since inception. The technology sector had a very
steep rise
from its bottom early in October through the end of January.
Oracle,
Cisco Systems, Texas Instruments, and Tellabs -- among our
growth
stocks -- rode the wave, as did the value stocks Compaq
Computer
and AMP.
Telecommunications and media companies also were strong
contributors
to our return. MCI WorldCom, our single largest holding, had
excellent performance, while Clear Channel Communications,
CBS,
and Univision Communications also did well.
And Not So Well.
Our shares in Ciena -- which makes devices that increase the
carrying
capacity of fiber optic networks -- dropped sharply when a
planned
merger with Tellabs fell through. Third-quarter revenues
were below
estimates and AT&T canceled its test of Ciena equipment. Our
estimates of Ciena's growth changed dramatically and we sold
our investment.
Some of our health care companies disappointed -- both
hospital
management firms, such as Columbia/HCA Healthcare, and drug
companies, such as American Home Products. We think the
issues
are temporary for both. Most investors have been
undervaluing
the growth prospects of hospital management firms; we
purchased
them very inexpensively and are waiting for a more general
appreciation of their potential. The prices of drug
companies,
on the other hand, have risen so high recently that we think
they will rest for a while. Since technology stocks have
more
room to rise in the near future, we sold most of our drug
company
stocks to reinvest in technology.
Looking Ahead.
The performance divergence between growth and value stocks
over the
past year has sharpened the differences in value. Some
market leaders
are selling at multiples of their yearly earnings that are
about as
high as it makes sense to pay. Where we think a growth stock
or sector
has run ahead of its earnings potential, we have cut back in
search of
better opportunities. Our value stocks were purchased at
exceptionally
low prices compared to the market averages, so we believe
they have
considerable room for upward movement. Whether the
superiority of
growth investing continues or market favor swings to value,
we own
stocks that we believe are well positioned for superior long-
term
performance.
Five Largest Holdings in the...
...Value Portfolio
2.9% Tandy Corp.
Retail
2.8% LucasVarity
Automobiles & Trucks
2.6% Morgan Stanley Dean
Witter & Co.
Banks & Financial Services
2.6% Compaq Computer
Computer Hardware
2.4% Wellpoint Health Networks, Inc.
Health Care
...Growth Portfolio
5.7% MCI WorldCom, Inc.
Telecommunications
5.0% Oracle Systems Corp.
Computer Services
5.0% MBNA Corp.
Banking
4.6% Cisco Systems, Inc.
Networking
4.5% Texas Instruments, Inc.
Electronic Components
Expressed as a percentage of net assets as of 1/31/99.
1
<PAGE>
Two Portfolio Managers, One Goal: Performance.
Tom Jackson and Sig Segalas discuss investment philosophy.
Q. Three sectors accounted for more than 70% of our assets
on
January 31. Why is this?
Sig Segalas: The 20/20 Focus Fund is meant to be a
concentrated
portfolio. Tom and I each pick our best stocks with less
concern
about diversification than we normally might have. Because I
am
limited to only 20 stocks, I have to make sure each has the
strongest chance of a significantly superior performance
within
the next year. I can't wait for some stocks to mature while
others support the portfolio -- the portfolio isn't large
enough.
Each has to be performing now. This is by design an
aggressive
portfolio. Concentration necessarily increases the
possibility
that returns will fluctuate. If Tom and I are right (in our
own
ways), returns may be higher than a market average, but they
may
be lower if one or both of us are significantly wrong.
Tom Jackson: A second consideration is that there may be
more
diversity than appears in our sector chart, particularly
since
we are two very different portfolio managers. We have
different
preferences within a sector. Each sector contains several
industries, so there may be more diversification in the Fund
than is apparent. For example, technology includes computer
companies, communications equipment manufacturers, and
electronics
companies. Consumer growth stocks include hospital
management,
drug companies, and HMOs. A third consideration is that even
within an industry, Sig and I will normally select companies
with very different strategies and prospects. I bought
Morgan
Stanley Dean Witter, which focuses on investment banking,
while
Sig bought MBNA, which is a major credit card company. But
they
are both classified as financial services companies.
Sig Segalas: It is a different kind of diversification --
diversification by style. Since value and growth styles
typically
differ in strength of performance, style diversification may
be
even more effective in smoothing our return than owning many
sectors. Although the Fund will be classified as balanced
between styles, the stocks themselves tend to be either deep
value or strong growth selections. We combine a very strict
value discipline with a very strict growth discipline.
Strongly
disciplined portfolio managers tend to do well in the long
term.
We know what we are looking for.
Tom Jackson: The strategy of the Fund is to reduce the risk
of
concentration by tying together the performance of two
managers
with styles that are very, very different. We look at
completely
different stocks, although the ways in which they differ
don't
show up in the sector classifications. The stocks Sig looks
at
are much too expensive for me to even give them passing
consideration, while I buy companies that are cheap
precisely
because investors can't see rapid near-term growth for them.
Sig
wouldn't look at them. The 20/20 Focus Fund benefits because
we
are looking in different places, each of us very carefully,
for
outstanding investment buys.
Prudential
20
20
Focus Fund
2
<PAGE>
A Message to Our Shareholders March
26, 1999
(PHOTO)
Dear Shareholder,
When I think about how Prudential's clients can benefit from
their
investments, one of my recent concerns is how misleading
today's
equity markets have become. Major index advances continue to
be
driven by the stocks of a handful of very large companies.
These
stocks are getting more and more expensive, out of
proportion to
their earnings expectations. As a result, a substantial
disparity
in value continues to grow between large and small companies
and
between growth and value stocks.
Since not all stocks are benefiting from the highly
publicized
euphoria surrounding each record-breaking milestone, it is
unlikely
that these trends will continue. In fact, history shows that
markets
generally bring prices in line with earnings performance
sooner or
later.
Diversification Is Critical.
Instead of chasing recent market winners, investors should
have
a well-diversified asset allocation strategy in place and
keep to
it. It is also a good practice to rebalance your holdings
when
necessary to keep your asset allocation consistent with your
long-term objectives and risk tolerance. A properly
diversified
portfolio of value- and growth-oriented mutual funds, bond
funds
and money market funds could help you weather inevitable
market
turbulence and receive more consistent returns over time.
Prudential
offers a wide range of mutual funds to help our shareholders
diversify. We have also designed several balanced and
diversified
funds to allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
3
<PAGE>
Portfolio of Investments as
of January 31, 1999 PRUDENTIAL
20/20 FOCUS FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
--------------------------------------------------------
- ---
LONG-TERM INVESTMENTS--96.1%
COMMON STOCKS--96.1%
--------------------------------------------------------
- ---
Automobiles & Trucks--2.8%
4,139,023 LucasVarity PLC $
19,753,617
- ------------------------------------------------------------
Banks & Financial Services--13.7%
366,300 Chase Manhattan Corp.
28,182,206
1,260,300 MBNA Corp.
35,209,631
142,000 Morgan (J.P.) & Co., Inc.
14,981,000
211,000 Morgan Stanley Dean Witter & Co.
18,317,438
---------
- ---
96,690,275
- ------------------------------------------------------------
Chemicals--2.0%
357,300 Eastman Chemical Co.
14,515,312
- ------------------------------------------------------------
Computer Hardware--2.6%
381,600 Compaq Computer Corp.
18,173,700
- ------------------------------------------------------------
Computer Services--15.4%
471,900 3Com Corp.(a)
22,179,300
426,300 Autodesk, Inc.
18,837,131
293,650 Cisco Systems, Inc.(a)
32,760,328
639,800 Oracle Systems Corp.(a)
35,428,925
---------
- ---
109,205,684
- ------------------------------------------------------------
Diversfied Consumer Products--4.0%
155,000 Loews Corp.
13,049,062
329,000 Philip Morris Companies, Inc.
15,463,000
---------
- ---
28,512,062
- ------------------------------------------------------------
Electronic Components--4.5%
322,200 Texas Instruments, Inc.
31,857,525
Entertainment--0.2%
218,000 Park Place Entertainment Corp. $
1,485,125
- ------------------------------------------------------------
Forest Products--4.4%
533,700 Mead Corp.
15,277,162
274,000 Temple-Inland, Inc.
15,635,125
---------
- ---
30,912,287
- ------------------------------------------------------------
Healthcare--6.7%
856,600 Columbia/HCA Healthcare Corp.
15,525,875
733,700 Tenet Healthcare Corp.(a)
15,224,275
228,000 Wellpoint Health Networks Inc.
17,057,250
---------
- ---
47,807,400
- ------------------------------------------------------------
Hotels--0.9%
425,000 Hilton Hotels Corp.
6,135,938
- ------------------------------------------------------------
Insurance--1.9%
348,900 SAFECO Corp.
13,563,488
- ------------------------------------------------------------
Media--7.5%
762,200 CBS Corp.
25,914,800
440,200 Clear Channel Communications,
Inc.(a)
27,237,375
---------
- ---
53,152,175
- ------------------------------------------------------------
Office Equipment & Supplies--2.2%
411,000 Harris Corp.
15,412,500
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as
of January 31, 1999 PRUDENTIAL
20/20 FOCUS FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
-------------------------------------------------------
- -----
Oil & Gas--1.4%
177,000 Atlantic Richfield Co. $
10,155,375
- ------------------------------------------------------------
Oil Services--1.8%
229,000 Societe Nationale Elf Aquitaine S.A.
(ADR) (France)
12,509,125
- ------------------------------------------------------------
Pharmaceuticals--3.9%
503,400 Schering Plough Corp.
27,435,300
- ------------------------------------------------------------
Precious Metals--1.3%
965,000 Freeport-McMoRan Copper & Gold Inc.
9,227,813
- ------------------------------------------------------------
Restaurants--3.5%
318,800 McDonald's Corp.
25,125,425
- ------------------------------------------------------------
Retail--5.1%
619,100 Dillards Department Stores, Inc.
15,361,419
377,600 Tandy Corp.
20,390,400
---------
- ---
35,751,819
- ------------------------------------------------------------
Telecommunications--10.3%
173,900 Ascend Communications, Inc.(a)
15,183,644
507,300 MCI WorldCom, Inc.(a)
40,457,175
381,500 Univision Communications Inc.(a)
17,119,812
---------
- ---
72,760,631
---------
- ---
Total long-term investments
(cost $584,630,143)
680,142,576
---------
- ---
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
-------------------------------------------------------
- ----
SHORT-TERM INVESTMENTS--6.4%
- ------------------------------------------------------------
Commercial Paper--1.6%
$ 10,976 Chevron USA Inc.
4.75%, 2/1/99
(cost $10,976,000) $
10,976,000
- ------------------------------------------------------------
Repurchase Agreement--4.8%
33,909 Joint Repurchase Agreement Account,
4.72%, 2/1/99
(cost $33,909,000; (Note 5))
33,909,000
---------
- ---
Total short-term investments
(cost $44,885,000)
44,885,000
---------
- ---
- ------------------------------------------------------------
Total Investments--102.5%
(cost $629,515,143; Note 4)
725,027,576
Liabilities in excess of other
assets--(2.5%)
(17,470,346)
---------
- ---
Net Assets--100%
$707,557,230
---------
- ---
---------
- ---
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Statement of Assets and Liabilities
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
January 31, 1999
<S>
<C>
Investments, at value (cost
$629,515,143)...............................................
.................. $ 725,027,576
Cash........................................................
..............................................
15,830
Receivable for Fund shares
sold........................................................
................... 5,021,952
Dividends and interest
receivable..................................................
....................... 251,725
Deferred offering
cost........................................................
............................ 29,671
- ----------------
Total
assets......................................................
..................................... 730,346,754
- ----------------
Liabilities
Payable for investments
purchased...................................................
...................... 18,717,951
Payable for Fund shares
purchased...................................................
...................... 2,941,319
Distribution fee
payable.....................................................
............................. 455,574
Management fee
payable.....................................................
............................... 427,707
Accrued
expenses....................................................
...................................... 246,973
- ----------------
Total
liabilities.................................................
..................................... 22,789,524
- ----------------
Net
Assets......................................................
.......................................... $
707,557,230
- ----------------
- ----------------
Net assets were comprised of:
Shares of beneficial interest, at
par.........................................................
......... $ 61,711
Paid-in capital in excess of
par.........................................................
.............. 617,633,051
- ----------------
617,694,762
Accumulated net realized loss on
investments.................................................
.......... (5,649,965)
Net unrealized appreciation on
investments.................................................
............ 95,512,433
- ----------------
Net assets, January 31,
1999........................................................
...................... $ 707,557,230
- ----------------
- ----------------
Class A:
Net asset value and redemption price per share
($159,777,666 / 13,902,111 shares of beneficial
interest issued and outstanding)....................
$11.49
Maximum sales charge (5% of offering
price)......................................................
...... .60
- ----------------
Maximum offering price to
public......................................................
................. $12.09
- ----------------
- ----------------
Class B:
Net asset value, offering price and redemption price per
share
($443,797,705 / 38,738,020 shares of beneficial
interest issued and outstanding)....................
$11.46
- ----------------
- ----------------
Class C:
Net asset value and redemption price per share
($81,100,255 / 7,079,145 shares of beneficial interest
issued and outstanding)......................
$11.46
Sales charge (1% of offering
price)......................................................
.............. .11
- ----------------
Offering price to
public......................................................
......................... $11.57
- ----------------
- ----------------
Class Z:
Net asset value, offering price and redemption price per
share
($22,881,604 / 1,992,166 shares of beneficial interest
issued and outstanding)......................
$11.49
- ----------------
- ----------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
PRUDENTIAL 20/20 FOCUS FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
July 1,
1998(a)
Through
Net Investment Income January 31,
1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $41,316)..................... $
3,259,050
Interest.................................
1,377,735
-------------
- ----
Total income..........................
4,636,785
-------------
- ----
Expenses
Management fee...........................
2,388,789
Distribution fee--Class A................
192,505
Distribution fee--Class B................
1,959,165
Distribution fee--Class C................
380,207
Transfer agent's fees and expenses.......
395,000
Registration fees........................
303,000
Organizational expense...................
96,000
Custodian's fees and expenses............
85,000
Reports to shareholders..................
50,000
Amortization of prepaid offering cost....
39,000
Audit fees and expenses..................
27,000
Legal fees and expenses..................
25,000
Trustees' fees and expenses..............
10,000
Miscellaneous............................
2,133
-------------
- ----
Total expenses........................
5,952,799
-------------
- ----
Net investment loss.........................
(1,316,014)
-------------
- ----
Realized and Unrealized Gain/Loss
on Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions..................
(5,649,965)
Foreign currency transactions............
101,689
-------------
- ----
(5,548,276)
Net change in unrealized appreciation on
investments..............................
95,512,433
-------------
- ----
Net gain on investments.....................
89,964,157
-------------
- ----
Net Increase in Net Assets
Resulting from Operations................... $
88,648,143
-------------
- ----
-------------
- ----
</TABLE>
- ---------------
(a) Commencement of investment operations.
PRUDENTIAL 20/20 FOCUS FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
July 1,
1998(a)
Increase in Through
Net Assets January 31,
1999
<S> <C>
Operations
Net investment loss........................ $
(1,316,014)
Net realized loss on investments and
foreign currency transactions...........
(5,548,276)
Net change in unrealized appreciation on
investments.............................
95,512,433
------------
- -----
Net increase in net assets resulting from
operations..............................
88,648,143
------------
- -----
Dividends and distributions (Note 1)
Tax return of capital distribution
Class A.................................
(349,450)
Class B.................................
(35,325)
Class C.................................
(6,617)
Class Z.................................
(44,675)
------------
- -----
(436,067)
------------
- -----
Fund share transactions (net of share
conversions) (Note 6)
Proceeds from shares sold..................
689,777,037
Net asset value of shares issued in
reinvestment of dividends and
distributions...........................
422,572
Cost of shares reacquired..................
(70,954,455)
------------
- -----
Net increase in net assets from Fund share
transactions............................
619,245,154
------------
- -----
Total increase................................
707,457,230
Net Assets
Beginning of period...........................
100,000
------------
- -----
End of period................................. $
707,557,230
------------
- -----
------------
- -----
- ---------------
(a) Commencement of investment operations.
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
Notes to Financial Statements
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
Prudential 20/20 Focus Fund (the 'Fund') is registered under
the Investment
Company Act of 1940 as a non-diversified, open-end
management investment
company. The investment objective of the Fund is long-term
growth of capital.
The Fund invests primarily in up to 40 equity securities of
U.S. companies that
are selected by the Fund's two investment advisers (up to 20
by each) as having
strong capital appreciation potential. The Fund issued 2,500
shares each of
Class A, Class B, Class C and Class Z shares of beneficial
interest for $100,000
on April 14, 1998 to Prudential Investments Fund Management
LLC ('PIFM').
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Investments, including options, traded
on a national
securities or commodities exchange and Nasdaq National
Market equity securities
are valued at the last reported sales price on the primary
exchange on which
they are traded. Securities traded in the over-the-counter
market (including
securities listed on exchanges whose primary market is
believed to be
over-the-counter) and listed securities for which no sale
was reported on that
date are valued on the basis of valuations provided by an
independent pricing
agent or principal market maker.
Short-term securities which mature in more than 60 days are
valued at current
market quotations. Short-term securities which mature in 60
days or less are
valued at amortized cost which approximates market value.
Repurchase Agreement: In connection with transactions in
repurchase agreements
with United States financial institutions, it is the Fund's
policy that its
custodian or designated subcustodians under triparty
repurchase agreements, as
the case may be, take possession of the underlying
collateral securities, the
value of which exceeds the principal amount of the
repurchase transaction,
including accrued interest. If the seller defaults and the
value of the
collateral declines or if bankruptcy proceedings are
commenced with respect to
the seller of the security, realization of the collateral by
the Fund may be
delayed or limited.
All securities are valued as of 4:15 p.m., New York time.
Foreign Currency Translation: The books and records of the
Fund are maintained
in United States dollars. Foreign currency amounts are
translated into United
States dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the
current rate of exchange.
(ii) purchases and sales of investment securities, income
and expenses--at the
rates of exchange prevailing on the respective dates of such
transactions.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains and losses on
sales of investments
are calculated on the identified cost basis. Dividend income
is recorded on the
ex-dividend date and interest income is recorded on the
accrual basis. Expenses
are recorded on the accrual basis which may require the use
of certain estimates
by management.
Net investment income (other than distribution fees) and
unrealized and realized
gains or losses are allocated daily to each class of shares
based upon the
relative proportion of net assets of each class at the
beginning of the day.
Dividends and Distributions: Dividends from net investment
income are declared
and paid semi-annually. The Fund will distribute at least
annually net capital
gains in excess of capital loss carryforwards, if any.
Dividends and
distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Taxes: It is the Fund's policy to meet the requirements of
the Internal Revenue
Code applicable to regulated investment companies and to
distribute all of its
taxable net income and net capital gains, if any, to its
shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends have been provided
for in accordance with
the Fund's understanding of the applicable country's tax
rules and rates.
Offering and Organization Expenses: Approximately $96,000
were incurred and
expensed in connection with the organization of the Fund.
Offering cost of
approximately $67,000 are being amortized ratably over a
period of twelve months
from the date the Fund commenced investment operations.
Reclassification of Capital Accounts: The Fund accounts and
reports for
distributions to shareholders in accordance with the
American Institute of
Certified Public Accountants, Statement of Position 93-2:
Determination,
Disclosure, and Financial Statement Presentation of Income;
Capital Gain, and
Return of Capital Distributions by Investment Companies. The
effect of applying
this statement was to increase undistributed net investment
income by
$1,752,081, increase accumulated net realized loss on
investments by $101,689
and decrease paid-in capital in excess of par
- ------------------------------------------------------------
- --------------------
8
<PAGE>
Notes to Financial Statements
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
by $1,650,392 due to a net operating loss and a tax return
of capital
distribution for the period ended January 31, 1999. Net
investment income, net
realized gains and net assets were not affected by this
change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential
Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has
responsibility for all
investment advisory services and supervises the subadvisers'
performance of such
services. PIFM has entered into subadvisory agreements with
The Prudential
Investment Corporation ('PIC') and Jennison Associates LLC
('Jennison'). Each
subadviser furnishes investment advisory services in
connection with the
management of the Fund. PIFM pays for the cost of the
Subadviser's services, the
compensation of officers of the Fund, occupancy and certain
clerical and
bookkeeping costs of the Fund. The Fund bears all other
costs and expenses. Each
of the two Subadvisers manages approximately 50% of the
assets of the Fund. In
general, in order to maintain an approximately equal
division of assets between
the two Subadvisers, all daily cash inflows (i.e.,
subscriptions and reinvested
distributions) and outflows (i.e., redemptions and expense
items) will be
divided between the two Subadvisers as PIFM deems
appropriate. In addition,
there will be periodic rebalancing of the portfolio's assets
to take account of
market fluctuations in order to maintain the approximately
equal allocation. As
a consequence, the portfolio will allocate assets from the
better performing of
the two Subadvisers to the other.
The management fee paid to PIFM is computed daily and
payable monthly, at an
annual rate of .75 of 1% of the Fund's average daily net
assets. PIC is
reimbursed by PIFM for its reasonable costs and expenses
incurred in providing
services to a portion of the Fund's assets. Jennison is
compensated by PIFM for
its services at the rate of .30 of 1% of the average daily
net assets of the
portion of the Fund that Jennison manages up to and
including $300 million and
.25 of 1% of such average daily net assets in excess of $300
million.
The Fund has a distribution agreement with Prudential
Investment Management
Services LLC ('PIMS'), which acts as the distributor of the
Class A, Class B,
Class C and Class Z shares of the Fund. The Fund compensates
PIMS for
distributing and servicing the Fund's Class A, Class B and
Class C shares,
pursuant to plans of distribution (the 'Class A, B and C
Plans'), regardless of
expenses actually incurred by them. The distribution fees
for Class A, B and C
shares are accrued daily and payable monthly. No
distribution or service fees
are paid to PIMS as distributor of the Class Z shares of the
Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates
PIMS for
distribution-related activities at an annual rate of up to
.30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C
shares, respectively.
Such expenses under the Class A, Class B and Class C Plans
were .25%, 1% and 1%,
respectively, of the average daily net assets of Class A,
Class B and Class C
shares for the period ended January 31, 1999.
PIMS has advised the Fund that it has received approximately
$4,479,000 and
$61,000 in front-end sales charges resulting from sales of
Class A and Class C
shares, respectively, during the period ended January 31,
1999. From these fees,
PIMS paid such sales charges to dealers (Prudential
Securities Incorporated and
PRUCO Securities Corporation), which in turn paid
commissions to salespersons.
PIMS has advised the Fund that it has received approximately
$470,500 and
$52,400 in contingent deferred sales charges imposed upon
certain redemptions by
Class B and Class C shareholders, respectively.
PIFM, PIMS, PIC and Jennison are indirect, wholly owned
subsidiaries of The
Prudential Insurance Company of America ('Prudential').
The Fund, along with other affiliated registered investment
companies (the
'Funds'), has a credit agreement (the 'Agreement') with an
unaffiliated lender.
The maximum commitment under the Agreement is $200,000,000.
Interest on any such
borrowings outstanding will be at market rates. The purpose
of the Agreement is
to serve as an alternative source of funding for capital
share redemptions. The
Fund has not borrowed any amounts pursuant to the Agreement
during the period
ended January 31, 1999. The Funds pay a commitment fee at an
annual rate of .055
of 1% on the unused portion of the credit facility. The
commitment fee is
accrued and paid quarterly on a pro rata basis by the Funds.
The Agreement
expired on February 28, 1999 and has been extended through
March 12, 1999, under
the same terms.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent and during the period
ended January 31,
1999, the Fund incurred fees of approximately $360,000 for
the services of PMFS.
As of January 31, 1999, approximately $58,000 of such fees
were due to PMFS.
Transfer agent fees and expenses in the Statement of
Operations include certain
out-of-pocket expenses paid to nonaffiliates.
For the period ended January 31, 1999, Prudential Securities
Incorporated, an
indirect wholly owned subsidiary of Prudential, earned
$41,267
- ------------------------------------------------------------
- --------------------
9
<PAGE>
Notes to Financial Statements
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
in brokerage commissions from portfolio transactions
executed on behalf of the
Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the period ended January 31, 1999 aggregated
$961,790,152 and $371,510,044,
respectively.
The federal income tax basis of the Fund's investments at
January 31, 1999 was
$632,125,580 and, accordingly, net unrealized appreciation
for federal income
tax purposes was $92,901,996 (gross unrealized appreciation-
- -$133,748,337; gross
unrealized depreciation--$40,846,341).
For federal income tax purposes, the Fund had a capital loss
carryforward as of
January 31, 1999, of approximately $3,039,528 which expires
in 2007.
Accordingly, no capital gains distributions are expected to
be paid to
shareholders until future net gains have been realized in
excess of such
carryforward.
- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered investment
companies, transfers
uninvested cash balances into a single joint account, the
daily aggregate
balance of which is invested in one or more repurchase
agreements collateralized
by U.S. Government or federal agency obligations. As of
January 31, 1999, the
Fund had a 5% undivided interest in repurchase agreements in
the joint account.
The undivided interest for the Fund represented $33,909,000
in principal amount.
As of such date, each repurchase agreement in the joint
account and the value of
the collateral therefor was as follows:
Bear, Stearns & Co., Inc., 4.75%, dated 1/29/99, in the
principal amount of
$200,000,000, repurchase price $200,079,167, due 2/1/99. The
value of the
collateral including accrued interest is $206,615,704.
Salomon Smith Barney, Inc., 4.73%, dated 1/29/99, in the
principal amount of
$200,000,000, repurchase price $200,078,833, due 2/1/99. The
value of the
collateral including accrued interest is $204,209,880.
Morgan, (J.P.) Securities, Inc., 4.72%, dated 1/29/99, in
the principal amount
of $200,000,000, repurchase price $200,078,667, due 2/1/99.
The value of the
collateral including accrued interest is $204,000,313.
SBC Warburg Dillon Read, Inc., 4.62%, dated 1/29/99, in the
principal amount of
$80,255,000, repurchase price $80,285,898, due 2/1/99. The
value of the
collateral including accrued interest is $81,862,553.
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z
shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B
shares are sold with a
contingent deferred sales charge which declines from 5% to
zero depending on the
period of time the shares are held. Prior to November 2,
1998, Class C shares
were sold with a contingent deferred sales charge of 1%
during the first year.
Effective November 2, 1998, Class C shares are sold with a
front-end sales
charge of 1% and a contingent deferred sales charge of 1%
during the first 18
months. Class B shares automatically convert to Class A
shares on a quarterly
basis approximately seven years after purchase. A special
exchange privilege is
also available for shareholders who qualified to purchase
Class A shares at net
asset value. Class Z shares are not subject to any sales or
redemption charge
and are offered exclusively for sale to a limited group of
investors.
There is an unlimited number of shares of beneficial
interest, $.001 par value
per share, divided into four classes, designated Class A,
Class B, Class C and
Class Z.
Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- ------------------------------------- ---------- --------
- ----
<S> <C> <C>
July 1, 1998(a) through
January 31, 1999:
Shares sold.......................... 16,742,582
$167,315,504
Shares issued in reinvestment of
dividends.......................... 33,206
338,369
Shares reacquired.................... (2,906,652)
(28,864,601)
---------- --------
- ----
Net increase in shares outstanding
before conversion.................. 13,869,136
138,789,272
Shares issued upon conversion from
Class B............................ 30,475
305,798
---------- --------
- ----
Net increase in shares outstanding... 13,899,611
$139,095,070
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class B
- -------------------------------------
<S> <C> <C>
July 1, 1998(a) through
January 31, 1999:
Shares sold.......................... 41,599,322
$415,817,933
Shares issued in reinvestment of
dividends.......................... 3,323
33,793
Shares reacquired.................... (2,836,718)
(27,718,475)
---------- --------
- ----
Net increase in shares outstanding
before conversion.................. 38,765,927
388,133,251
Shares reacquired upon conversion
into Class A....................... (30,407)
(305,798)
---------- --------
- ----
Net increase in shares outstanding... 38,735,520
$387,827,453
---------- --------
- ----
---------- --------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
10
<PAGE>
Notes to Financial Statements
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class C Shares
Amount
- ------------------------------------- ---------- --------
- ----
<S> <C> <C>
July 1, 1998(a) through
January 31, 1999:
Shares sold.......................... 7,993,762 $
80,272,330
Shares issued in reinvestment of
dividends.......................... 630
6,403
Shares reacquired.................... (917,747)
(8,944,615)
---------- --------
- ----
Net increase in shares outstanding... 7,076,645 $
71,334,118
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class Z
- -------------------------------------
<S> <C> <C>
July 1, 1998(a) through
January 31, 1999:
Shares sold.......................... 2,526,447 $
26,371,270
Shares issued in reinvestment of
dividends.......................... 4,323
44,007
Shares reacquired.................... (541,104)
(5,426,764)
---------- --------
- ----
Net increase in shares outstanding... 1,989,666 $
20,988,513
---------- --------
- ----
---------- --------
- ----
</TABLE>
- ---------------
(a) Commencement of offering of Class A, B, C and Z shares.
- ------------------------------------------------------------
- --------------------
11
<PAGE>
Financial Highlights
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class
A Class B Class C
Class Z
----------
- ------ ---------------- ---------------- -------
- ---------
July 1,
1998(a) July 1, 1998(a) July 1, 1998(a) July
1, 1998(a)
Through Through Through
Through
January
31, January 31, January 31,
January 31,
1999(e) 1999(e) 1999(e)
1999(e)
----------
- ------ ---------------- ---------------- -------
- ---------
<S> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $
10.00 $ 10.00 $ 10.00
$ 10.00
-----
- -- ------- ------ -
- -----
Income from investment operations
Net investment income (loss)..................
.01 (.04) (.03)
.02
Net realized and unrealized gain on
investments and foreign currencies.........
1.51 1.50 1.49
1.51
-----
- -- ------- ------ -
- -----
Total from investment operations...........
1.52 1.46 1.46
1.53
-----
- -- ------- ------ -
- -----
Less distributions:
Tax return of capital distribution............
(.03) --(d) --(d)
(.04)
-----
- -- ------- ------ -
- -----
Net asset value, end of period................ $
11.49 $ 11.46 $ 11.46
$ 11.49
-----
- -- ------- ------ -
- -----
-----
- -- ------- ------ -
- -----
TOTAL RETURN(b):..............................
15.19% 14.61% 14.61%
15.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...............
$159,777 $443,798 $ 81,100
$ 22,882
Average net assets (000)......................
$131,335 $334,157 $ 64,848
$ 12,905
Ratios to average net assets:
Expenses, including distribution fees(c)...
1.32% 2.07% 2.07%
1.07%
Expenses, excluding distribution fees(c)...
1.07% 1.07% 1.07%
1.07%
Net investment income (loss)(c)............
.13% (.62)% (.62)%
.38%
For Class A, B, C and Z shares
Portfolio turnover............................
70%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported. Total returns for
periods of less than one
full year are not annualized.
(c) Annualized.
(d) Less than .005 per share.
(e) Calculations are made based on average month-end shares
outstanding during
the period.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
Report of Independent Accountants
PRUDENTIAL 20/20 FOCUS FUND
- ------------------------------------------------------------
- --------------------
The Shareholders and Board of Trustees of
Prudential 20/20 Focus Fund:
In our opinion, the accompanying statement of assets and
liabilities, including
the portfolio of investments, and the related statements of
operations and of
changes in net assets and the financial highlights present
fairly, in all
material respects, the financial position of Prudential
20/20 Focus Fund (the
'Fund') at January 31, 1999, and the results of its
operations, the changes in
its net assets and the financial highlights for the period
July 1, 1998
(commencement of operations) through January 31, 1999, in
conformity with
generally accepted accounting principles. These financial
statements and
financial highlights (hereafter referred to as 'financial
statements') are the
responsibility of the Fund's management; our responsibility
is to express an
opinion on these financial statements based on our audit. We
conducted our audit
of these financial statements in accordance with generally
accepted auditing
standards which require that we plan and perform the audit
to obtain reasonable
assurance about whether the financial statements are free of
material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe that our
audit, which included confirmation of securities at January
31, 1999 by
correspondence with the custodian and brokers, provides a
reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
March 19, 1999
- ------------------------------------------------------------
- --------------------
13
<PAGE>
Getting The Most From Your Prudential Mutual Fund.
Some mutual fund shareholders won't ever read this -- they
don't read
annual and semi-annual reports. It's quite understandable.
These
annual and semi-annual reports are prepared to comply with
Federal
regulations. They are often written in language that is
difficult
to understand. So when most people run into those
particularly
daunting sections of these reports, they don't read them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our
report
to make it easier to understand and more pleasant to read,
in hopes
you'll find it profitable to spend a few minutes
familiarizing yourself
with your investment. Here's what you'll find in the report:
At A Glance
Since an investment's performance is often a shareholder's
primary
concern, we present performance information in two different
formats.
You'll find it first on the "At A Glance" page where we
compare the
Fund and the comparable average calculated by Lipper
Analytical
Services, a nationally recognized mutual fund rating agency.
We
report both the cumulative total returns and the average
annual
total returns. The cumulative total return is the total
amount
of income and appreciation the Fund has achieved in various
time
periods. The average annual total return is an annualized
representation of the Fund's performance -- it generally
smoothes
out returns and gives you an idea how much the Fund has
earned in
an average year, for a given time period. Under the
performance
box, you'll see legends that explain the performance
information,
whether fees and sales charges have been included in
returns, and
the inception dates for the Fund's share classes.
See the performance comparison charts at the back of the
report for
more performance information. And keep in mind that past
performance
is not indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports
on
successful -- and not-so-successful -- strategies in this
section of
your report. Look for recent purchases and sales here, as
well as
information about the sectors the portfolio manager favors
and any
changes that are on the drawing board.
Portfolio Of Investments
This is where the report begins to look technical, but it's
really
just a listing of each security held at the end of the
reporting
period, along with valuations and other information. Please
note
that sometimes we discuss a security in the Portfolio
Manager's
Report that doesn't appear in this listing because it was
sold
before the close of the reporting period.
<PAGE>
Statement Of Assets And Liabilities
The balance sheet shows the assets (the value of the Fund's
holdings),
liabilities (how much the Fund owes) and net assets (the
Fund's
equity, or holdings after the Fund pays its debts) as of the
end
of the reporting period. It also shows how we calculate the
net
asset value per share for each class of shares. The net
asset
value is reduced by payment of your dividend, capital gain,
or
other distribution, but remember that the money or new
shares
are being paid or issued to you. The net asset value
fluctuates
daily along with the value of every security in the
portfolio.
Statement Of Operations
This is the income statement, which details income (mostly
interest
and dividends earned) and expenses (including what you pay
us to
manage your money). You'll also see capital gains here --
both
realized and unrealized.
Statement Of Changes In Net Assets
This schedule shows how income and expenses translate into
changes
in net assets. The Fund is required to pay out the bulk of
its income
to shareholders every year, and this statement shows you how
we do
it -- through dividends and distributions -- and how that
affects
the net assets. This statement also shows how money from
investors
flowed into and out of the Fund.
Notes To Financial Statements
This is the kind of technical material that can intimidate
readers,
but it does contain useful information. The Notes provide a
brief
history and explanation of your Fund's objectives. In
addition, they
also outline how Prudential Mutual Funds prices securities.
The Notes
also explain who manages and distributes the Fund's shares,
and more
importantly, how much they are paid for doing so. Finally,
the Notes
explain how many shares are outstanding and the number
issued and
redeemed over the period.
Financial Highlights
This information contains many elements from prior pages,
but on a
per share basis. It is designed to help you understand how
the Fund
performed and to compare this year's performance and
expenses to
those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and
certifies
that the information is fairly presented and complies with
generally
accepted accounting principles.
Tax Information
This is information which we report annually about how much
of your
total return is taxable. Should you have any questions, you
may want
to consult a tax advisor.
Performance Comparison
These charts are included in the annual report and are
required by
the Securities Exchange Commission. Performance is presented
here
as a hypothetical $10,000 investment in the Fund since its
inception
or for 10 years (whichever is shorter). To help you put that
return
in context, we are required to include the performance of an
unmanaged,
broad based securities index, as well. The index does not
reflect
the cost of buying the securities it contains or the cost of
managing a mutual fund. Of course, the index holdings do not
mirror those of the fund -- the index is a broadly based
reference
point commonly used by investors to measure how well they
are doing.
A definition of the selected index is also provided.
Investors
generally cannot invest directly in an index.
<PAGE>
Getting The Most From Your Prudential Mutual Fund.
When you invest through Prudential Mutual Funds, you receive
financial
advice through a Prudential Securities financial advisor or
Prudential/Pruco Securities registered representative. Your
advisor or representative can provide you with the following
services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you
match the reward you seek with the risk you can tolerate.
And risk
can be difficult to gauge --sometimes even the simplest
investments
bear surprising risks. The educated investor knows that
markets
seldom move in just one direction -- there are times when a
market
sector or asset class will lose value or provide little in
the way
of total return. Managing your own expectations is easier
with help
from someone who understands the markets and who knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative can help
you wade
through the numerous mutual funds available to find the ones
that
fit your own individual investment profile and risk
tolerance.
While the newspapers and popular magazines are full of
advice
about investing, they are aimed at generic groups of people
or
representative individuals, not at you personally. Your
financial
advisor or registered representative will review your
investment
objectives with you. This means you can make financial
decisions
based on the assets and liabilities in your current
portfolio and
your risk tolerance -- not just based on the current
investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at the
bottom are
among the most common investor mistakes. But sometimes it's
difficult to hold on to an investment when it's losing value
every month. Your financial advisor or registered
representative
can answer questions when you're confused or worried about
your
investment, and remind you that you're investing for the
long haul.
<PAGE>
Comparing A $10,000 Investment.
- ---------------------------------------------------
Prudential 20/20 Focus Fund vs. the S&P 500 Index.
/ / Prudential 20/20 Focus Fund
- -- S&P 500 Index
Past performance is not indicative of future results.
Principal and
investment return will fluctuate so that an investor's
shares, when
redeemed, may be worth more or less than their original
cost.
These graphs compare a $10,000 investment in the Prudential
20/20
Focus Fund (Class A, B, C, and Z shares) with a similar
investment
in the Standard & Poor's 500 Composite Stock Price Index
(S&P 500
Index) by portraying the account values at the commencement
of
operations of Class A, B, C, and Z shares, and at the end of
the
fiscal year (January 31), as measured on a quarterly basis,
beginning in 1998 for Class A, B, C, and Z shares. For
purposes
of the graphs, and unless otherwise indicated, it has been
assumed
that (a) the maximum applicable front-end sales charges were
deducted from the initial $10,000 investment in Class A and
Class C shares; (b) the maximum applicable contingent
deferred
sales charges were deducted from the value of the investment
in
Class B and Class C shares, assuming full redemption on
January
31, 1999; (c) all recurring fees (including management fees)
were
deducted; and (d) all dividends and distributions were
reinvested.
Class B shares will automatically convert to Class A shares,
on a
quarterly basis, approximately seven years after purchase.
Class
Z shares are not subject to a sales charge or distribution
fee.
Since the Fund has been in existence less than one year, no
average annual total returns are presented.
The S&P 500 Index is a market capitalization-weighted index
representing the aggregate market value of the common equity
of 500 stocks primarily traded on the New York Stock
Exchange.
The S&P 500 Index is an unmanaged index. The total return
includes
the reinvestment of all dividends, but does not reflect the
payment
of transaction costs and advisory fees associated with an
investment
in the Fund. The S&P 500 Index is not the only index that
may be
used to characterize performance of equity funds. The
securities
in the S&P 500 Index may differ substantially from the
securities
in the Fund. Other indexes may portray different comparative
performance. Investors cannot invest directly in an index.
These graphs are furnished to you in accordance with SEC
regulations.
Class A (GRAPH)
Class B (GRAPH)
Class C (GRAPH)
Class Z (GRAPH)
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the
Fund's portfolio holdings are for the period covered by this
report and are subject to change thereafter.
This report is not authorized for distribution to
prospective
investors unless preceded or accompanied by a current
prospectus.
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